Suntory plans $4.7-bn IPO; Japan's largest in'13
30 May 2013
Suntory Beverage & Food Ltd, a unit of Japanese brewing and distilling giant Suntory Holdings Ltd has received regulatory approval for a ¥476-billion ($4.7 billion) initial public offering (IPO), making it Japan's largest IPO so far this year.
A successful outcome of the offering is expected to add further momentum to the Japanese stock market that has risen about 80 per cent since mid-November, on the back of election promises by prime minister Shinzo Abe on fiscal and monetary stimulus to spur economic growth.
There have been 15 public issues so far this year all of which have been well received by investors with their listing prices commanding a premium over their fixed prices.
Suntory intends to use the IPO proceeds to pay back its debt as well as for mergers and acquisitions to expand its business overseas.
Osaka-based Suntory, founded more than a century ago, produces and distributes a range of alcoholic beverages such as whiskies, beers and wines. Its major brands include Yamazaki malt whisky, Premium Malt's beer, and ready-to-drink Cocktail Bar series among others.
The beverage & food division produces popular drinks such as green tea brand Lyemon, Suntory Oolong Tea, Boss coffee, Pepsi Nex and Orangina.
The division which contributes more than half of the Suntory group's total revenue reported sales of $9.8 billion last year. Suntory plans to double the unit's sales to around $20 billion by 2020.
Suntory Beverage & Food's domestic and global operations were integrated in 2011, aiming to increase its focus on developing business in Europe, Oceania, Asia and the US, growing core brands while bolstering the base operations in each country.
Suntory's major rivals in the field include beverage giant Kirin Holdings Co Ltd and Asahi Group Holdings Ltd.
According to some industry observers, the Japanese beverage market is saturated. Whether Suntory will be attractive in the beverage industry compared with Kirin and Asahi will depend on its overseas strategy, they say.
Further to its listing on 3 July, Suntory Beverage & Food Ltd will become the country's third-largest beverage and food company by market capitalisation.
The company plans to raise $3.5 billion by issuing new shares, while its parent company will offer the balance. Further to the offering, Suntory Holdings will own 60-per cent stake in the newly listed company.
In recent years, Suntory has been continuously engaged in acquisitions and developing business partnerships with major beverage companies aiming to expand its global footprint.
In 2009, Sundory acquired European drink maker Orangina Schweppes from its private equity owners for €2.6 billion and later it bought New Zealand's no.2 beverage maker Funcor Group.
In 2010, the company entered into a partnership agreement with global beverage giant PepsiCo Inc's China unit, expanding distribution of its products in the country.
In 2011, Sundory formed a joint venture with Indonesian's beverage and food group Garudafood.
Last October, it formed a strategic alliance with PepsiCo in Vietnam by acquiring a 51-per cent stake in its beverage business there which will serve as the bottler for both companies in Vietnam.
Kirin made an attempt to take over Sundory in 2009, but few months later it was announced that the negotiations between the two have been terminated.
